Friday, March 22, 2013

Calling him a liar to his face - How Sir John Pease of Standard Chartered has been forced to eat his words about sanctions busting!

One of the less enlightening elements of the
way in which large banks and their senior management have responded to the wave
of regulatory interventions they have brought upon themselves by their own
criminality, has been their use of the PR advisers with their carefully-crafted
weasel words, which have been used to down-play the level and degree of
culpability which has so exemplified the banking sector's criminal wrongdoings.

It is typical of the way in which these
institutions seek to position themselves in the best possible light, and how
they refuse to acknowledge that their conduct has been criminal, in order to
deceive their clients about their true behaviour, because they know that
without these subterfuges and economic truthfulness, it would inevitably open
them up to other criticism and contumely.

It is almost as if these institutions believe
they have right, indeed, a positive duty, to make as little as they can of the
opprobrium which has been heaped upon them, and to seek to find ways of
minimising their criminality and their thoroughly dishonest behaviour.

There is a criminological explanation for this
kind of behaviour, it is called 'Techniques of Neutralisation'. I intend to
rehearse this phenomenon here because I believe that in it, we will find valuable
explanations for recent public actions and statements by banksters.

Gresham Sykes and David Matza were two US
criminologists who wanted to build upon Edwin Sutherland’s 'Differential
Association' theory which states that an individual learns criminal behaviour
through;

These techniques reduce the social controls
over the perpetrator and are applicable not only to specific juvenile offenders,
but also white collar criminals.

Neutralization is defined as a technique, which
allows the person to rationalize or justify a criminal act.There are five techniques of neutralization;
denial of responsibility, denial of injury, denial of the victim, condemnation
of the condemners, and the appeal to higher loyalties.

Denial of responsibility is a technique used
when the deviant act was influenced by an outside force. This technique goes
beyond looking at the criminal act as an accident.The individual offender feels that they are
drawn into the situation, ultimately becoming helpless.These offenders feel that the environment
within which they have to work (in these cases, what they perceive as a degree
of over-regulation, or of too many legal requirements with which they have to
comply), eventually result in their committing criminal acts.A common statement used can be often heard;“It was not my fault.”

Denial of injury occurs when the criminal act
causes no physical harm to an identifiable victim.Criminal acts are deemed deviant in terms of
whether or not someone gets physically hurt, and it becomes very difficult if
not impossible to focus attention on a large group which is hurt financially.
Using this technique the offender views certain kinds of fraud such as PPI as merely
'clever business'. “I assumed that a criminal action meant hurting someone, we
did not hurt anyone”

Denial of the victim is used when the crime is
viewed as reasonable conduct towards persons who are not deserving of better
treatment.This technique may be used by
those who treat their clients like 'mugs' or 'muppets'.“ Anybody this dumb deserves to get screwed.”Much of this attitude can be seen in the fraudulent
selling of interest rate derivative swaps. A common observation under this heading is 'If we didn't take the money, someone else would have done'.

The technique called the condemnation of the
condemners, also known as 'rejection of the rejectors', places a negative image
on those who are opposed to the criminal behaviour. The offender ends up
displacing his/her deviant behaviour on those they are victimizing and also
viewing the condemners as hypocrites,of acting outside the scope of their
authority. The behaviour of many City commentators, fellow apologists and
banksters over the way in which the New York Financial Services Commissioner
dealt with Standard Chartered Bank would fall into this category.

Finally, the appeal to higher loyalties
technique is used when the person feels they must break the laws of the overall
community to benefit their own particular identified group or /institution.
This technique comes into play when a bankster gets into trouble because of engaging
in significant risk-taking to deliver extraprofit for his institution. The appeal is to other members of his elite
group or industry sector, requiring their support for actions which they have
all engaged in at one time or another and which are ideally accepted within the
special group as being legitimatefor the
greater interest of the institution. A common observation would be 'It cannot be criminal, everyone does it'.

These techniques are regularly resorted to by
the banksters when they have been caught out cheating, stealing and defrauding
their clients, the market more generally, or flouting international laws. They
are deeply offensive to anyone who is familiar with the criminology, and they
identify the banksters and their culture as being on a level below bottom
feeding, swamp-life in the evolutionary scale of development.

Well, it was reported on Thursday 21st of March
that Standard Chartered Bank have been forced into a humiliating apology to US
Regulators for comments recently made by the Chairman, Sir John Peace about the
bank's recent misconduct over its dealings with Iran.

At a recent press conference on 5th March, dealing
with banker's remuneration, questions were asked "concerning individual
employee conduct and compensation" following the deferred prosecution
agreements in the United States over the Iran sanctions breaking affair.

Sir John had replied, when asked about bonuses
for executives: "We had no wilful act to avoid sanctions; you know,
mistakes are made – clerical errors – and we talked about last year a number of
transactions which clearly were clerical errors or mistakes that were
made."

These words, let us state clearly here and now,
are deliberate lies, and a classic example of one of the techniques of
neutralisation because they are a complete and outright denial of
responsibility.

Back in December 2012, Standard Chartered Bank
negotiated a deal with US Regulators for their criminal actions in flouting US
sanctions against Iran. First, the negotiations which had been dragging on for
some months with the New York Department of Financial Services, were finally
brought to a head when the Americans threatened to withdraw the bank's licence
to do business in New York. Subsequently, the bank entered into a Deferred
Prosecution Agreement settlement with the Justice Department, and paid a series
of fines amounting to $667 million dollars.

The important issue at stake here is what are
the implications of the Deferred Prosecution Agreement (DPA) which the bank
entered into to get out from under. The New York state regulator accused
Standard Chartered of running a "rogue institution" that conspired
with Iran to hide more than $250 billion in illegal transactions for nearly a
decade. The bank at the time said the department's findings didn't present
"a full and accurate picture of the facts." However, It nonetheless
reached a final settlement with the department in September and with the four
other authorities in December.

Under the settlements, Standard Chartered
acknowledged it had removed or omitted Iranian information from U.S. dollar
wire payment messages, and that it and its employees had engaged in criminal
conduct. The agreements Standard Chartered made last year required it to admit
wrongdoing over its Iranian dealings and pay fines in exchange for avoiding
prosecution. The U.S. can prosecute the bank if it believes the terms were
violated.

Having been privileged to sit in US courts and
observe these agreements being arrived at, I can report that the process is
both formal and frankly compelling. The person or the institution concerned is
asked very clearly whether they admit the truthfulness of the admissions they
are about to make. They are told in no uncertain terms that they are not being
forced to make these admissions and that if they wish to, they can roll the
dice and go to trial. They are warned of the consequences of not abiding by the
terms of the agreement, all of which are rehearsed with them, and they are
cautioned that the agreement can be rescinded at any time in the deferral
period if they violate the deal. There can be no question that they do not
understand the entire terms of the process, and no-one who has witnessed the
process could accuse the US authorities of 'holding a gun to the head' of the
institution. These processes are held in open court or in a Judge's chambers,
and they are very formal affairs and intended to be taken seriously.

Having read Sir John's public denial of his
bank's wilful culpability in the Iranian sanctions matter, the US authorities have
acted swiftly, because Sir John was now in breach of his public undertakings
made when the deferred prosecution agreement was entered into.

Sir John has been a complete fool for making his
statement on March 5th, because it flies in the face of the plea agreement made
with the Court and denies the truth of the situation admitted in America.

Bur Sir John has been forced to see the error
of his ways and has been forced to retract his objectionable remarks in a highly
personal and abject mea culpa on behalf of the Bank on Thursday. In a letter to
the Stock Exchange, he has been forced to admit saying things that were “legally
and factually incorrect”, in other words, they were in breach of the DPA and
lies!

“I made certain statements that I very much
regret and that were at best inaccurate,” he said, and apologised, personally
and on behalf of senior executives. For good measure, he had to get down on bended
knee and accept “on behalf of the bank and its employees, for past knowing and
wilful criminal conduct in violating US economic sanctions laws and
regulations, and related New York criminal laws, as set out in the deferred
prosecution agreement”.

So, there you have it, this humiliating episode
is a perfect case study of the techniques of neutralisation and also in the
implications of the way in which British bankers seem to believe that despite
whatever important agreements they come to with foreign regulators, they can
come home and seek to lie and dissemble about the activities to which they have
just made vitally important admissions in a U.S.Court hearing.

It is quite incredible that this has happened,
this is the arrogance of these people writ large. It says quite openly, 'we
don't give a flying fuck for the Americans or their laws', but this is the
state of affairs in the UK, where members of the Great and Good will lie
themselves blue in the face about their wrongdoings, sooner than admit the
plain unvarnished truth, which is that they are a bunch of lying scumbags!

Thankfully, the US Regulators, who are
presently smarting under the lash of the new Senate hearings in which serious
questions are being asked about how best to deal with such banks in future, have
got the message and have forced Pease into a humiliating acknowledgement of his
failings.

Whether Sir John's capability to carry on in
his role of Chairman of Standard Chartered is in any doubt, is a matter for the
relevant authorities and the shareholders. Some, like myself, believe that he
should go, resign now to prevent the public face of Standard Chartered from
being held up to any further ridicule for having a confirmed liar on its Board.

The problem is that all his City mates will be
quietly clustering around him, patting him on the back and saying "...there,
there old boy, could have happened to any one of us, don't worry about it, who
do the bloody Yanks think they are anyway..."

And all the British press will be slagging off
the Americans and accusing them of using their powers to bully Britain because
they are jealous of us as a financial centre.

And the usual apologists will be crawling out
from under their stones to rally round the flag, I expect to see BoJo at any
second!

Another goodie Rowan. So there we have it Sir John Peace is a blatant liar and moreover doesn't give a flying fuck for a legal agreement delivered to a US court and banking regulator. Quite why all the companies on whose boards he sits haven't demanded his resignation is mystery and merely confirms the untouchable status bankers have assumed for themselves. Craven bastards all of them. Ashley

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!